Exercise 17-15 Santana Mortgage Company uses a process cost system to accumulate

Question

Exercise 17-15 Santana Mortgage Company uses a process cost system to accumulate costs in its Application Department. When an application is completed, it is forwarded to the Loan Department for final processing The following processing and cost data pertain to September. 1. Applications in process on September 1, 160 2. Applications started in September, 1,000 3. Completed applications during September, 740 4. Applications still in process at September 30 were 100% complete as to materials (forms) and 60% complete as to conversion costs. Beginning WIP: Direct materials Conversion costs $1,110 4,930 September costs: Direct materials Direct labor Overhead $4,968 12,680 8,698 Materials are the forms used in the application process, and these costs are incurred at the beginning of the process. Conversion costs are incurred uniformly during the process. Determine the equivalent units of service (production) for materials and conversion costs. Materials Conversion Costs The equivalent units of service (production)

Explanation / Answer

Equivalent Cost ;-

Unit Cost :-

Prepare the Reconcilation Schedule :-

Particulars Direct Material Conversion Cost Incurred :- Beginning Work in Process $1110 $4930 Material $4968 Labor $12680 Overhead    $8698 Total (A) $6978 $26308 Units :- Work in Process - Beginning 160 160 Completed 580 580 (740-160)*100% = 580 100% 100% Work in Process - Ending 420 252 (160+1000-740)*Percentage Complete 100% 60% Equivalent Units (B) 1160 992 Equivalent Unit Cost (A/B) $6.015 $26.52

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